How to refinance your property
Is it possible to refinance a property if you don’t live in it? YES
How can this be?
In today’s mortgage market, quite a few home loan programs for investment properties are available through Fannie Mae or Freddie Mac — but there are still portfolio lenders offering investment property programs that Fannie Mae and Freddie Mac don’t offer.
Translation: Just because one lender tells you it isn’t possible to refinance your investment property, it doesn’t mean that it isn’t possible.
For those people who have recently heard that it wasn’t possible to refinance their investment property, it is likely that they were given one of two common reasons
Are these the only reasons that someone would be unable to refinance their rental property?
Your loan-to-value is too high…
For investment properties, generally speaking, lenders will allow you to go up to a 75% loan-to-value. This means that if your investment property is worth $200,000 the most that your loan can be for is $150,000.
If you own an investment property that is worth $200,000 and you owe more than $150,000 on the mortgage currently, most lenders will tell you that you are not eligible for a refinance due to LTV restrictions.
LTV restrictions are different by loan program, but generally speaking you should expect to be required to have significantly more equity in an investment property than you would a primary residence.
Your current interest rate is too low
Lenders have determined that loans made to investors for investment properties are riskier than loans to homeowners who live in the home as their primary residence. As such, lenders will have a different rate for investment properties — a higher one — than they will for primary residences.
How much higher? A good estimate is 0.5 percent higher.
Other items you may need to refinance an investment property